Mayor Ed Lee vetoes school money in pre-budget skirmish

Supervisor Jane Kim, a one-time ally of Mayor Ed Lee before recent tumult, saw the mayor veto her legislation that would have drawn down city reserves to help the San Francisco Unified District. (Paul Chinn / The Chronicle)

Mayor Ed Lee on Wednesday used his line-item veto power to strike out part of legislation the Board of Supervisors approved Tuesday that would have provided the programs almost $2.3 million.

Lee approved $1.4 million of the money, but lined out $843,000 that would have come out of the city’s $15 million reserve to cover cuts in state and federal funding.

The mayor said he supported the San Francisco Unified School District’s effort to meet its aggressive requirement to have all graduates qualified for state universities when they’re done with high school.

“I do not support the use of general fund reserves — money we set aside to backfill safety net cuts from the sate & federal government — for this purpose,” Lee said in his veto statement.

Lee instead on Tuesday introduced legislation to release an additional $1.5 million to the school district from the rain day reserve — a $31.1 million fund designed, in part, to provide financing for schools in tough times.

Using the rainy day reserve, though, is opposed by a teachers union and their ally, Assemblyman Tom Ammiano, who view it as a backstop only to be used when the district is facing state cuts that mean severe layoffs.

“If we use rainy day money now, we may not have the funds when dire circumstances occur,” Ammiano wrote in a recent opinion piece in The Chronicle. “What’s worse, it sets a precedent for raiding the rainy day fund for something other than its intended purpose. Once the controls are loosened, others may fall to the same temptation and raid the fund repeatedly.”

With a $7.6 billion budget for the fiscal year that starts in July, $843,000 isn’t a huge amount of money. But City Hall players say this dispute is really just a skirmish in advance of upcoming budget battles, with the mayor laying out a firm line that the general fund isn’t going to be raided at will.

Even though the city is facing the lowest projected deficit in five years, it’s still a shortfall — $129 million at last count. Lee has directed department heads to pare their budgets by 1.5 percent for the next fiscal year and another 1.5 percent for the following year.

And as Supervisor Mark Farrell has pointed out, lest folks think the good times are here again, the city is still facing $4.4 billion in unfunded health care liabilities for workers and retirees that are not addressed in the budget.